If you are reading this, you are probably well acquainted with Airbnb and how great it can be at helping you earn rental income from your home.
If you are still reading this, you are also likely well acquainted with the phenomenon dubbed “host fatigue,” where the sheer volume of work (10 hours per week!!) required from you to earn that rental income is becoming overwhelming.
Fortunately, there is an answer that can give you the best of both worlds: work with an Airbnb manager, and get rental income without doing the work.
But before picking an Airbnb manager for your vacation home, there are 7 factors you should consider first:
How reputable is this Airbnb manager? Is she a college student who has heard about Airbnb and how quickly it is growing, and wants to ride the wave? Or is she a professional who is licensed to rent out other people’s vacation homes in the relevant jurisdiction?
How many years has the manager been doing this? How many other vacation rentals does she or he manage? How are the guest reviews? Are there owner reviews for your to review?
If your prospective property manager cannot provide a number of references for you, consider it a red flag.
Here at Rented.com, for example, we certify our network of over 600 managers based on financial, legal, and operational excellence to make sure you’re matched with only the best.
2. The management contract
When considering a vacation rental manager, take a close look at the Airbnb management contract. Who does the contract really serve—you or the manager? Who is liable for damage caused by guests? Who is taking the financial and operational risk?
Also make sure you know what you are responsible for.
Will you be paying the property manager a commission as most people do?
If so, review the contract, and compare it to the Rented.com Shared Success Contract. Known for having some of the most homeowner-friendly contracts in the industry, we have our managers assume operational risk while the financial risk and upside is shared between both owner and manager.
Looking for guaranteed rental income instead?
Look at the Rented.com Guarantee Rental Contract for a better understanding of how to structure a deal where you get a fixed rental income every month and the financial and operational risk falls on the manager.
3. Financial performance
How much rental income will Airbnb managers make you?
This is not just a product of how frequently the manager can find guests for your Airbnb, but also what price she is able to charge for the nights rented, and perhaps even more importantly, how much of that rental income ultimately flows to you as the owner.
If you sign a Guaranteed Rental Contract with the manager, this amount is set.
If you use a Shared Success (or Commission) Arrangement, the calculations can be trickier.
What is the vacation rental manager’s commission rate? Are there any additional fees?
Horror stories abound of owners being tempted to sign with a manager based on a low quoted commission rate, only to be blindsided when the effective commission rate was more than double the amount quoted due to “additional fees and management services.”
Always do your homework upfront, and know how much you can expect to make before agreeing to any arrangement.
4. Financial security
Ultimately this comes down to one question: How deep are the manager’s pockets?
Has the manager ever filed for bankruptcy? Ever been late on payments to owners?
What sort of insurance does the manager carry to make sure she can make you whole should things go wrong, and what type of insurance should you have?
5. Guest vetting
Maybe the manager is great at booking and cleaning your property, but how good is she at ensuring your home is taken care of?
Ask your manager what type of systems he or she has for vetting guests.
Does the Airbnb manager participate in a “bad guest” scheme?
Does the manager do background checks? How does the company check on the property during rentals?
Cleaning up after a mess is made is helpful, but making sure no mess is made in the first place is even better.
6. Impact on long term home value
Is the property manager an “asset manager” or simply someone looking to “churn-and-burn”?
One is not necessarily better than the other, and your preference will likely depend on your objectives for the home.
For example, if this is a short term investment property on which you are looking to maximize the annual income and depreciate the value for tax purposes, you may prefer a manager who will keep your home filled to maximum occupancy.
On the other hand, if this is a long term investment or even where you plan to retire, you will likely want to find someone very different.
7. Personal fit
Finally, it is important to remember that this is still a relationship business, and none of the above six factors really matter if you do not like or trust the manager.
Get to know your potential Airbnb manager. Skype if you’re home is far away, or try to even meet in person.
Ideally, your relationship with your property manager will be one you retain for years to come.
This post was written by our friends at Rented., which provides property management for vacation rentals and is the first wholesale marketplace for short term rentals and the sharing economy.